<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-30050
PEOPLES FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Mississippi 64-0709834
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Lameuse and Howard Avenues, Biloxi, Mississippi 39533
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(228) 435-5511
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date. Peoples Financial Corporation has
only one class of common stock authorized. At May 1, 1999, there were 15,000,000
shares of $1 par value common stock authorized, and 2,952,672 shares issued and
outstanding.
Page 1 of 19
<PAGE> 2
PART I
FINANCIAL INFORMATION
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, and March 31, 1999 1998 1998
- ------------------------------------ ------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 33,604,597 $ 30,359,600 $ 31,734,134
Held to maturity securities, market value of
$141,009,000 - March 31, 1999;
$135,924,000 - December 31, 1998;
$110,530,000 - March 31, 1998 140,496,326 134,723,695 109,582,619
Available for sale securities, at market value 13,552,954 12,836,885 32,527,199
Federal funds sold 48,950,000 13,050,000
Loans 290,682,700 291,514,748 265,041,695
Less: Unearned income 9,804 1,850 5,141
Allowance for loan losses 4,386,613 4,382,157 4,188,099
------------- ------------- -------------
Loans, net 286,286,283 287,130,741 260,848,455
Bank premises and equipment, net of
accumulated depreciation of $9,320,00
March 31, 1999; $8,930,000 - December
31, 1998; and $7,864,000 - March 31, 1998 16,681,731 15,923,450 10,810,758
Other real estate 154,810 274,280 456,992
Accrued interest receivable 2,806,901 3,128,279 3,059,637
Other assets 3,841,791 3,794,213 7,268,375
Intangible assets 118,366
------------- ------------- -------------
TOTAL ASSETS $ 546,375,393 $ 488,171,143 $ 469,456,535
============= ============= =============
</TABLE>
Page 2 of 19
<PAGE> 3
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, and March 31, 1999 1998 1998
- ------------------------------------ ------------- ------------- -------------
<S> <C> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand, non-interest bearing $ 94,344,254 $ 76,268,636 $ 77,470,454
Savings and demand, interest bearing 190,964,105 167,120,669 182,263,872
Time, $100,000 or more 77,118,568 68,080,406 71,456,166
Other time deposits 67,888,699 70,132,525 63,133,320
------------- ------------- -------------
Total deposits 430,315,626 381,602,236 394,323,812
Accrued interest payable 836,750 924,172 735,661
Federal funds purchased and securities sold
under agreements to repurchase 35,974,861 28,050,780 310,759
Notes payable 199,805 202,946 212,118
Other liabilities 4,520,581 3,845,616 4,170,307
------------- ------------- -------------
TOTAL LIABILITIES 471,847,623 414,625,750 399,752,657
SHAREHOLDERS' EQUITY:
Common Stock, $1 par value, 15,000,000 share
authorized, 2,952,672 shares issued and
outstanding at March 31, 1999, December
31, 1998 and March 31, 1998, after
giving retroactive effect to two for one
stock split effective November 16, 1998 2,952,672 2,952,672 2,952,672
Surplus 63,711,758 63,711,758 56,711,758
Undivided profits 7,636,807 6,739,151 9,826,584
Unearned compensation (160,900)
Accumulated other comprehensive income 226,533 302,712 212,864
------------- ------------- -------------
TOTAL SHAREHOLDERS' EQUITY 74,527,770 73,545,393 69,703,878
------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 546,375,393 $ 488,171,143 $ 469,456,535
============= ============= =============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 3 of 19
<PAGE> 4
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1999 1998
- ------------------------------- ----------- -----------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 6,116,045 $ 5,928,337
Interest and dividends on investments:
U. S. Treasury 1,182,984 1,232,656
U. S. Government agencies and corporations 631,544 866,147
States and political subdivisions 113,888 57,602
Other investments 84,375
Interest on federal funds sold 173,961 99,440
----------- -----------
TOTAL INTEREST INCOME 8,302,797 8,184,182
----------- -----------
INTEREST EXPENSE:
Time deposits of $100,000 or more 926,278 1,017,914
Other deposits 2,321,769 2,235,122
Mortgage indebtedness 2,716 2,880
Federal funds purchased and securities sold under
agreements to repurchase 281,937 60,613
----------- -----------
TOTAL INTEREST EXPENSE 3,532,700 3,316,529
----------- -----------
NET INTEREST INCOME 4,770,097 4,867,653
Provision for losses on loans 30,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS $ 4,740,097 $ 4,867,653
----------- -----------
</TABLE>
Page 4 of 19
<PAGE> 5
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1999 1998
- -------------------------------- ----------- -----------
<S> <C> <C>
OTHER OPERATING INCOME:
Trust department income and fees $ 280,415 $ 205,121
Service charges on deposit accounts 1,164,264 878,166
Other service charges, commissions and fees 56,178 71,503
Other income 107,926 5,129,578
Gain on securities 21,845
----------- -----------
TOTAL OTHER OPERATING INCOME 1,608,783 6,306,213
----------- -----------
OTHER OPERATING EXPENSE:
Salaries and employee benefits 2,397,291 2,174,982
Net occupancy 244,953 253,902
Equipment rentals, depreciation and maintenance 575,274 501,560
Other expense 896,598 1,620,601
----------- -----------
TOTAL OTHER OPERATING EXPENSE 4,114,116 4,551,045
----------- -----------
INCOME BEFORE INCOME TAXES 2,234,764 6,622,821
Income taxes 776,100 2,262,600
----------- -----------
NET INCOME $ 1,458,664 $ 4,360,221
=========== ===========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 5 of 19
<PAGE> 6
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Accumu-
lated
Other
# of Unearned Compre-
Common Common Undivided Compensa- hensive Comprehen-
Shares Stock Surplus Profits tion Income sive Income Total
--------- ----------- ------------ ----------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
JANUARY 1,
1998, AS
PREVIOUSLY
REPORTED 1,476,336 $ 1,476,336 $ 58,188,094 $ 5,924,027 $ -0- $ 183,305 $ 65,771,762
Two-for-one
stock split in
1998 1,476,336 1,476,336 (1,476,336)
--------- ----------- ------------ ----------- --------- --------- ------------
BALANCE,
JANUARY 1,
1998, AS
RESTATED 2,952,672 2,952,672 56,711,758 5,924,027 -0- 183,305 65,771,762
Comprehensive
Income:
Net income 4,360,221 $ 4,360,221 4,360,221
Net unrealized
loss on
available for
sale securities,
net of tax 53,509 53,509 53,509
Reclassification
adjustment
for available
for sale
securities
called or sold
in current
year, net of tax (23,950) (23,950) (23,950)
-----------
Total
comprehensive
income $ 4,389,780
===========
Cash
dividends
(.155 per
share) (457,664) (457,664)
--------- ----------- ------------ ----------- --------- --------- ------------
BALANCE,
MARCH 31,
1998 2,952,672 $ 2,952,672 $ 56,711,758 $ 9,826,584 $ -0- $ 212,864 $ 69,703,878
========= =========== ============ =========== ========= ========= ============
</TABLE>
Page 6 of 19
<PAGE> 7
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Accumu-
lated
Other
# of Unearned Compre-
Common Common Undivided Compensa- hensive Comprehen-
Shares Stock Surplus Profits tion Income sive Income Total
--------- ----------- ------------- ----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
JANUARY 1,
1999 2,952,672 $ 2,952,672 $ 63,711,758 $ 6,739,151 $ (160,900) $ 302,712 $ 73,545,393
Comprehensive
Income:
Net income 1,458,664 $ 1,458,664 1,458,664
Net unrealized
gain on
available for
sale securities,
net of tax (76,057) (76,057) (76,057)
Reclassifica-
tion adjustment
for available
for sale
securities
called in
current year,
net of tax (122) (122) (122)
------------
Total
comprehensive
income $ 1,382,485
============
Allocation of
ESOP shares 160,900 160,900
Cash
dividends
($ .19 per
share) (561,008) (561,008)
--------- ----------- ------------- ----------- ----------- ----------- -------------
BALANCE,
MARCH 31,
1999 2,952,672 $ 2,952,672 $ 63,711,758 $ 7,636,807 $ -0- $ 226,533 $ 74,527,770
========= =========== ============= =========== =========== =========== =============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 7 of 19
<PAGE> 8
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1999 1998
- -------------------------------- ------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,458,664 $ 4,360,221
Adjustments to reconcile net income to net cash provided
by operating activities:
Gain on sales and calls of securities (21,845)
Gain on sales of other real estate (449,530) (29,851)
Gain on sale of bank premises (5,083,867)
Depreciation and amortization 383,459 341,031
Provision for losses on other real estate 8,779
Changes in assets and liabilities:
Accrued interest receivable 321,378 560,280
Other assets 135,511 (724,395)
Accrued interest payable (87,422) 8,898
Other liabilities 718,745 1,680,226
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,480,805 1,099,477
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and calls of held to maturity
securities 33,040,000 25,050,000
Investment in held to maturity securities (38,812,631) (31,796,714)
Proceeds from maturities, sales and calls of available for
sale securities 1,112,622 15,226,174
Investment in available for sale securities (1,948,650) (4,943)
Proceeds from sales of other real estate 569,000 140,450
Loans, net (increase) decrease 1,005,358 (13,550,973)
Acquisition of premises and equipment (1,141,740) (610,565)
Federal funds sold (48,950,000) (6,900,000)
Other assets (183,089) 850,631
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES $ (55,309,130) $ (11,595,940)
------------- -------------
</TABLE>
Page 8 of 19
<PAGE> 9
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1999 1998
- -------------------------------- ------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Demand and savings deposits, net increase $ 41,928,831 $ 31,654,230
Time deposits, net increase (decrease) 6,784,559 (9,885,247)
Principal payments on notes (3,141) (2,976)
Cash dividends (561,008) (457,664)
Federal funds purchased and securities sold under
agreements to repurchase, net increase 7,924,081 310,759
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 56,073,322 21,619,102
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,244,997 11,122,639
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 30,359,600 20,611,495
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 33,604,597 $ 31,734,134
============ ============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 9 of 19
<PAGE> 10
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarters Ended March 31, 1999 and 1998
1. The accompanying unaudited consolidated financial statements have been
prepared with the accounting policies in effect as of December 31, 1998 as set
forth in the Notes to the Consolidated Financial Statements of Peoples Financial
Corporation and Subsidiaries (the Company). In the opinion of Management, all
adjustments necessary for a fair presentation of the condensed consolidated
financial statements have been included and are of a normal recurring nature.
The accompanying unaudited consolidated financial statements have been prepared
also in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulations S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
2. The results of operations for the quarter ended March 31, 1999, are not
necessarily indicative of the results to be expected for the full year.
3. Per share data is based on the weighted average shares of common stock
outstanding of 2,952,672 for the quarters ended March 31, 1999 and 1998.
4. At March 31, 1999 and 1998, the total recorded investment in impaired loans
amounted to $473,000 and $1,277,000, respectively. The amount of that recorded
investment in impaired loans for which there was a related allowance for loan
losses was $107,000 at March 31, 1998. The amount of that recorded investment in
impaired loans for which there was no related allowance for loan losses was
$473,000 and $1,170,000 at March 31, 1999 and 1998, respectively. At March 31,
1999, the average recorded investment in impaired loans was $473,000. During the
first quarter of 1999, the Company recognized $3,000 in interest income on
impaired loans. During the first quarter of 1999, the Company received $3,000 in
interest payments on impaired loans.
5. Transactions in the allowance for loan losses were as follows:
<TABLE>
<S> <C>
Balance, January 1, 1999 $ 4,382,157
Provision for loan losses 30,000
Recoveries 19,047
Loans charged off (44,591)
------------
Balance, March 31, 1999 $ 4,386,613
============
</TABLE>
Page 10 of 19
<PAGE> 11
6. The Company has defined cash and cash equivalents to include cash and due
from banks. The Company paid $3,620,000 and $3,308,000 for the quarters ended
March 31, 1999 and 1998, respectively, for interest on deposits and borrowings.
Income tax payments totaled $125,000 and $68,000 during the quarters ended March
31, 1999 and 1998, respectively. Loans transferred to other real estate amounted
to $64,000 for the quarter ended March 31, 1998. The Company acquired banking
premises in the amount of $1,959,000 during the quarter ended March 31, 1998, as
a result of a like-kind exchange. The Company recorded a receivable of
$4,037,000 relating to the like-kind exchange.
7. The income tax effect on the accumulated other comprehensive income was
$(39,000) and $15,000 at March 31, 1999 and 1998, respectively.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following presents Management's discussion and analysis of the consolidated
financial condition and results of operations of Peoples Financial Corporation
and Subsidiaries (the Company) for the quarters ended March 31, 1999 and 1998.
These comments highlight the significant events and should be considered in
combination with the Consolidated Financial Statements included in this report
on Form 10-Q.
OVERVIEW
Net income for the quarter ended March 31, 1999, was $1,459,000, compared with
$4,360,000 for the quarter ended March 31, 1998. This decrease of $2,901,000 is
primarily attributable to the fact that the Company realized a gain of
$3,300,000, net of taxes, for book purposes during the quarter ended March 31,
1998, as a result of the sale of one of its branch locations.
The significant development during the first quarter of 1999 was the sale of
other real estate at a gain, for book purposes, of $293,000, net of taxes.
The following schedule compares financial highlights for the quarters ended
March 31, 1999 and 1998:
<TABLE>
<CAPTION>
For the quarters ended March 31, 1999 1998
- -------------------------------- --------- ---------
<S> <C> <C>
Net income per share $ 0.49 $ 1.48
Book value per share $ 25.24 $ 23.61
Return on average total assets 1.12% 3.80%
Return on average shareholders' equity 7.87% 25.78%
Allowance for loan losses as a % of 1.51% 1.58%
loans, net of unearned discount
</TABLE>
Page 11 of 19
<PAGE> 12
FINANCIAL CONDITION
HELD TO MATURITY SECURITIES
Held to maturity securities increased $ 30,914,000 at March 31, 1999, as a
result of the management of the Company's liquidity position. As funds were
available either from the maturity of available for sale securities or the
increase in deposits, they were invested in short term U. S. Treasury and U. S.
Government Agency securities, which have been classified as held to maturity.
Gross unrealized gains for held to maturity securities were $942,000 and
$1,071,000 and gross unrealized losses for held to maturity securities were
$429,000 and $124,000 at March 31, 1999 and 1998, respectively. The following
schedule reflects the mix of the held to maturity investment portfolio at March
31, 1999 and 1998:
<TABLE>
<CAPTION>
March 31, 1999 1998
- --------- ----------------------- --------------------------
Amount % Amount %
------------ --------- ------------- -----------
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 91,227,812 64.90% $ 83,524,907 76.20%
U. S. Government
agencies 42,334,589 30.10% 20,428,947 18.60%
States and political
subdivisions 6,933,925 5.00% 5,628,765 5.20%
------------ --------- ------------- ---------
Totals $140,496,326 100.00% $ 109,582,619 100.00%
============ ========= ============= =========
</TABLE>
AVAILABLE FOR SALE SECURITIES
Available for sale securities decreased $18,974,000 in the management of the
Company's liquidity position, as discussed above. Gross unrealized gains were
$492,000 and $467,000 and gross unrealized losses were $154,000 and $147,000 at
March 31, 1999 and 1998, respectively. The following schedule reflects the mix
of available for sale securities at March 31, 1999 and 1998:
<TABLE>
<CAPTION>
March 31, 1999 1998
- --------- ----------------------- -----------------------
Amount % Amount %
------------- -------- ------------- -------
<S> <C> <C> <C> <C>
U. S. Treasury Securities $ 3,975,994 29.30% $ 3,995,940 12.30%
U. S. Government
agencies 5,718,981 42.20% 27,311,840 84.00%
States and political
subdivisions 3,216,646 23.70% 578,086 1.80%
Other securities 641,333 4.80% 641,333 1.90%
------------- -------- ------------- -------
Totals $ 13,552,954 100.00% $ 32,527,199 100.00%
============= ======== ============= =======
</TABLE>
Page 12 of 19
<PAGE> 13
FEDERAL FUNDS SOLD
Federal funds sold were $48,950,000 at March 31, 1999, as compared with
$13,050,000 at March 31, 1998, as a result of the management of the bank
subsidiary's liquidity position.
LOANS
Loans increased $25,641,000 at March 31, 1999, as compared with March 31, 1998,
as a result of the increase in loan demand in the Company's trade area during
the last 24 months.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment increased $5,871,000 at March 31, 1999, as compared
with March 31, 1998, primarily as the result of the construction of a new branch
facility in Gulfport.
OTHER ASSETS
Other assets decreased $3,400,000 at March 31, 1999, as compared with March 31,
1998, due to the fact that at March 31, 1998, the Company had recorded a
receivable of $4,037,000 related to the sale of bank premises which was
structured as a like-kind exchange for tax purposes.
DEPOSITS
Total deposits increased $35,992,000 at March 31, 1999, as compared with March
31, 1998. Significant increases or decreases in total deposits from quarter to
quarter are anticipated by Management as customers in the casino industry and
county and municipal areas reallocate their resources periodically. As discussed
above, the Company has managed its funds including planning the timing of
investment maturities so as to achieve appropriate liquidity.
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Federal funds purchased and securities sold under agreements to repurchase
increased $35,664,000 at March 31, 1999, as compared with March 31, 1998, as the
result of the introduction of a non-deposit product during 1998.
SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY
Strength, security and stability have been the hallmark of the Company since its
founding in 1985 and of its bank subsidiary since its founding in 1896. A strong
capital foundation is fundamental to the continuing prosperity of the Company
and the security of its customers and shareholders. One measure of capital
adequacy is the primary capital ratio which was 15.13% at March 31, 1999, as
compared with 16.06% at March 31, 1998. These ratios are well above the
regulatory minimum of 6.00%. Management continues to emphasize the importance of
maintaining the appropriate capital levels of the Company.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income, the amount by which interest income on loans, investments
and other interest earning assets exceeds interest expense on deposits and other
borrowed funds, is the single largest component of the Company's income.
Management's objective is to provide the largest possible amount of income while
balancing interest rate, credit, liquidity and capital risk.
Page 13 of 19
<PAGE> 14
Net interest income decreased $97,000 for the first quarter of 1999 as compared
with the first quarter of 1998. Total interest income increased $119,000 for the
quarter ended March 31, 1999, as compared with the quarter ended March 31, 1998.
Total interest expense increased $216,000 for the quarter ended March 31, 1999,
as compared with the quarter ended March 31, 1998. The following schedule
summarizes net interest earnings and net yield on interest earning assets:
Net Interest Earnings and Net Yield on Interest Earning Assets
<TABLE>
<CAPTION>
Quarters Ended March 31, (In
thousands, except percentages) 1999 1998
- ------------------------------ ------------- -----------
<S> <C> <C>
Total interest income (1) $ 8,362 $ 8,214
Total interest expense 3,533 3,317
------------- -----------
Net interest earnings $ 4,829 $ 4,897
============= ===========
Net yield on interest earning assets 4.26% 4.79%
============= ===========
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1999 and 1998.
The schedule on page 15 provides an analysis of the change in total interest
income and total interest expense for the quarters ended March 31, 1999 and
1998. These changes are generally attributable to a change in volume and/or a
change in the applicable rates.
Page 14 of 19
<PAGE> 15
Analysis of Changes in Interest Income and Interest Expense
(In Thousands)
<TABLE>
<CAPTION>
Attributable To:
---------------------------------------
For the For the
Quarter Quarter
Ended Ended
March 31, March 31, Increase Rate/
1999 1998 (Decrease) Volume Rate Volume
-------- --------- ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
INTEREST
INCOME: (1)
Loans (2) (3) $ 6,116 $ 5,928 $ 188 $ 803 $ (542) $ (73)
Federal funds sold 174 99 75 214 (44) (95)
Held to maturity:
Taxable 1,695 1,569 126 355 (187) (42)
Non-taxable 130 50 80 10 59 11
Available for sale:
Taxable 120 528 (408) (394) (57) 43
Non-taxable 43 40 3 129 (30) (96)
Other 84 84 84
------- -------- ---------- -------- ------- ---------
Total $ 8,362 $ 8,214 $ 148 $ 1,117 $ (717) $ (252)
======= ======== ========== ======== ======= =========
INTEREST
EXPENSE:
Savings and
demand, interest
bearing $ 1,373 $ 1,330 $ 43 $ 121 $ (72) $ (6)
Time deposits 1,875 1,923 (48) 89 (131) (6)
Federal funds
purchased and
securities sold under
agreements to
repurchase 282 61 221 368 (21) (126)
Mortgage
indebtedness 3 3
------- -------- ---------- -------- ------- ---------
Total $ 3,533 $ 3,317 $ 216 $ 578 $ (224) $ (138)
======= ======== ========== ======== ======= =========
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1999 and 1998.
(2) Loan fees are included in these figures.
(3) Includes nonaccrual loans.
Page 15 of 19
<PAGE> 16
PROVISION FOR LOAN LOSSES
Management continuously monitors the Company's relationships with its loan
customers, especially those in concentrated industries such as seafood, gaming
and hotel/motel, and their direct and indirect impact on its operations. A
thorough analysis of current economic conditions and the quality of the loan
portfolio are conducted on a quarterly basis. These analyses are utilized in the
computation of the adequacy of the allowance for loan losses. During the period
from 1993 until 1998, the Company had not recorded a provision for loan losses.
Beginning in January 1999, the Company began providing $10,000 for loan losses
on a monthly basis and expects to continue to do so throughout 1999. This action
was implemented primarily in response to the large increase in volume of the
loan portfolio and does not indicate a deterioration of its quality.
OTHER INCOME
During the first quarter of 1998, the Company realized a gain of $5,083,000 for
book purposes as the result of the sale of one its branch locations, as
mentioned previously in the Overview.
OTHER EXPENSE
Other expense increased $724,000 for the quarter ended March 31, 1999, as
compared with the quarter ended March 31, 1998, largely as the result of
expenses relating to the computer conversion.
LIQUIDITY
Liquidity represents the Company's ability to adequately provide funds to
satisfy demands from depositors, borrowers and other commitments by either
converting assets to cash or accessing new or existing sources of funds.
Management monitors these funds requirements in such a manner as to satisfy
these demands and provide the maximum earnings on its earning assets. Deposits,
payments of principal and interest on loans, proceeds from maturities of held to
maturity securities and earnings on held to maturity securities are the
principal sources of funds for the Company. At March 31, 1999, cash and due from
banks, investment securities and federal funds sold were 55% of total deposits,
as compared with 47% at March 31, 1998.
Page 16 of 19
<PAGE> 17
PART II
OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
(A) The Annual Meeting of Shareholders of the Company was held on
April 14, 1999.
(B) The following five directors were elected at the meeting to hold
office for a term of one year:
<TABLE>
<CAPTION>
Approve Disapprove
--------- ----------
<S> <C> <C>
Drew Allen 2,494,797 100
William A. Barq 2,494,817 80
Andy Carpenter 2,494,817 80
Chevis C. Swetman 2,494,817 80
F. Walker Tucei 2,494,817 80
</TABLE>
Shares not voted amounted to 457,775.
Item 5 - Other Information
At a meeting held on April 14, 1999, the Board of Directors of the Company
approved the following slate of officers:
Chevis C. Swetman President and Chief Executive Officer
Andy Carpenter Executive Vice President
Jeannette E. Romero First Vice President
Thomas J. Sliman Second Vice President
Robert M. Tucei Vice President
David M. Hughes Vice President
A. Wes Fulmer Vice President and Secretary
M. O. Lawrence, III Vice President
Lauri A. Wood Chief Financial Officer and Controller
Page 17 of 19
<PAGE> 18
During the fiscal year ended December 31, 1998, the number of shareholders of
the Company's common stock increased to more than five hundred (500). Pursuant
to the Section 12(g) of the Exchange Act of 1934, the Company registered its
common stock by filing Form 10, the General Form for Registration of Securities,
with the Commission on April 13, 1999.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Schedule 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 18 of 19
<PAGE> 19
SIGNATURES
Pursuant to the requirement of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
PEOPLES FINANCIAL CORPORATION
(Registrant)
Date: May 10, 1999
--------------------------------------
By: /s/ Chevis C. Swetman
--------------------------------------
Chevis C. Swetman
Chairman, President and Chief Executive Officer
Date: May 10, 1999
--------------------------------------
By: /s/ Lauri A. Wood
--------------------------------------
Lauri A. Wood
Chief Financial Officer and Controller
(principal financial and accounting officer)
Page 19 of 19
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 33,604,597
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 48,950,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,552,954
<INVESTMENTS-CARRYING> 140,496,326
<INVESTMENTS-MARKET> 141,009,000
<LOANS> 290,682,700
<ALLOWANCE> 4,386,613
<TOTAL-ASSETS> 546,375,393
<DEPOSITS> 430,315,626
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,520,581
<LONG-TERM> 199,805
0
0
<COMMON> 2,952,672
<OTHER-SE> 71,575,098
<TOTAL-LIABILITIES-AND-EQUITY> 546,375,393
<INTEREST-LOAN> 6,116,045
<INTEREST-INVEST> 2,012,791
<INTEREST-OTHER> 173,961
<INTEREST-TOTAL> 8,302,797
<INTEREST-DEPOSIT> 3,248,047
<INTEREST-EXPENSE> 3,532,700
<INTEREST-INCOME-NET> 4,770,097
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 896,598
<INCOME-PRETAX> 2,234,764
<INCOME-PRE-EXTRAORDINARY> 2,234,764
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,458,664
<EPS-BASIC> 0.49
<EPS-DILUTED> 0.49
<YIELD-ACTUAL> 4.26
<LOANS-NON> 473,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,382,157
<CHARGE-OFFS> 44,591
<RECOVERIES> 19,047
<ALLOWANCE-CLOSE> 4,386,613
<ALLOWANCE-DOMESTIC> 4,386,613
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 250,000
</TABLE>
